"You have to register with the URSSAF, literally, the Union for the Recovery of social security and family allowance payment, a very simple process. Once you have your URSSAF number, you can get going. YOU MUST NOT INVOICE A SINGLE CLIENT WITHOUT HAVING FIRST REGISTERED. Sorry Brian! The URSSAF informs other social funds that you have set up and you will receive invoices for minimum contributions from health and retirement funds. You will also be given the list of organisations you can chose from. Annual minimum health contributions for a sole practitioner/liberal profession are in the region of Â£1,750 and around Â£2,000 for retirement. (You will find it worthwhile to take out complimentary cover, but this may mean doubling these amounts for effective cover.) In the first 2 years, the URSSAF contributions are not too heavy but thereafter, they will be based on your profit and you will see the difference !
No obligation to register for VAT when your annual sales are below roughly Â£17,500. Above that amount, you have to register for VAT, although if it happens at the end of a year and you only just go over â up to about Â£20,000, they will not hassle you to collect the amount of VAT you ought to have billed. Once you are liable to charge VAT and/or if you decide to register for VAT at the outset, as a member of the liberal profession, you pay only the VAT on the amounts actually received, unlike limited companies who pay the VAT on the amount they have billed, whether or not their client has paid them. When sending back and paying over the VAT due, you take the amount of VAT you have received from clients you have billed and then you deduct VAT on any relevant purchases you have made. (If you are not VAT registered, you pay the VAT on purchases and cannot deduct that amount. But donât worry, you deduct your expenses all inclusive of VAT when filing your annual (income) return.

Any profit (if liberal profession) is taken into account on the household tax return, which for most folks mean paying 10% income tax. Any loss can be deducted too. In the first couple of years, this might be useful as although you can operate a business without going into the red, you may find that once you have entered all the right figures into the right columns, you can technically declare a loss. Very important : if you start up as a âmicro-entrepriseâ which has certain advantages, do note that you cannot deduct any losses.

As for VAT, as and when you register, you can choose to pay over the actual amount received, either monthly or quarterly. You can also choose to pay the same amount every month and then pay out (or receive) any difference on the last quarter."

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